Affiliate Marketing AbusesThe Who, the Why, and (Steps Towards) the Fix

Benjamin Edelman

March 9, 2012Affiliate Management Days

Why affiliate marketing?• Creativity• Reach• Attractive pricing model, risk model

Affiliate marketing fixes…

Affiliate marketing fixes…• Invisible banner ads

Affiliate marketing fixes…• Invisible banner ads• Click fraud rooms• Click fraud botnets

Why affiliate marketing?• Creativity• Reach• Attractive pricing model, risk model

/BUT/• How to supervise many small affiliates a

retailer has never met?• Many & divergent incentives: merchant,

network, affiliate program manager, affiliate

Affiliate earns commission if …• User browses the affiliate’s web site• User clicks affiliate’s link to merchant /and/• User makes a purchase

Merchant can safely partner with anyone?

<iframe SRC="http://affiliate.buy.com/gateway.aspx?adid= 17662&#038;aid=10389736&#038;pid=2705091&#038;sid=&#038; sURL=http%3A//www.buy.com/" WIDTH=5 HEIGHT=5 frameborder="0" scrolling="no">

<img src="http://www.avxf.com/img16.jpg" border="0" alt="" /><img src="http://www.avxf.com/img17.jpg" border="0" alt="" />

GET /img16.jpg HTTP/1.1 ...Host: www.avxf.com

HTTP/1.1 302 Found ...Location: http://secure.hostgator.com/cgi-bin/ affiliates/clickthru.cgi?id=dsplcmnt01 ...

GET /img17.jpg HTTP/1.1 ... Host: www.avxf.com

HTTP/1.1 302 Found ...Location: http://www.amazon.com/?...&tag=qufrho-20

sea5s.com

Sea5s

Retailerkingdom

GAN

Sears

ePipoNCase180 Search AssistantZangoSeekmoMossySky

commission: 20% on $19.95 to $49.95

“earned” if a user buys within the next 45 days

via this popup, the back window, or otherwise

Affiliate earns commission if …• User requests affiliate web site• User clicks affiliate’s link to merchant /and/• User makes a purchase

Merchant can safely partner with anyone?

Supervising Affiliates• Penalties? Litigation?• Identity verification

– Name - email - phone number - address - tax ID - IP

• Need to prevent sequential pseudonymity(reregistering using a new name)

Incentives wishlist• Take existing detection technology as given• Effective at deterrence

– Reduce cat-and-mouse• Undercut incentives for use of pseudonyms

and multiple identities

Payment delay• Pay more slowly.• If uncover a fraud, don’t pay.• Pay a bonus to make good agents indifferent.

– Compensate good agents for having to wait.– Focus delays on affiliates who are suspect

(new, coy, missing Referers, etc.)

References:

Delaying Payment to Deter Online Advertising Fraud (2008)benedelman.org/paymentdelay

Deterring Online Advertising Fraud Through Optimal Payment in Arrears Financial Cryptography 2009 - SV LNCS

Fixing Affiliate Marketing• Supervising small affiliates.• Managing divergent incentives: merchant,

network, affiliate program manager, affiliate

Incentives aligned?

merchant down

in-house affiliate manager ?

outsourced affiliate manager up

affiliate network up

affiliate up

For a given fixed amount of merchant sales, a selfish … wants commissions to go …

“30 on 130”

“10% of year-over-year growth”

“I run an important department”

CJ Advertiser Service AgreementTo the fullest extent permissible pursuant to applicable law, CJ disclaims all warranties implied, including … that CJ’s security methods will be sufficient … The entire risk as to satisfactory quality, performance [and] accuracy … is with you. CJ is, under no circumstances, responsible for the practices, acts or omissions of any advertiser or publisher.

…

full post

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Fixing Affiliate MarketingCan a merchant• Supervise thousands of small affiliates the

merchant has never met?• Manage divergent incentives: merchant,

network, affiliate program manager, affiliate?

/AND/• Retain the cost-effectiveness, excitement,

flexibility, and passion of affiliate marketing?

benedelman.orgmore examples, perpetrators, and infractions